A teacher's
"value-added" is defined as the average test-score gain for
his or her students, adjusted for differences across
classrooms in student characteristics (such as their previous
scores). Is teacher value-added a good measure of
teacher quality?

When a high value-added (top
5%) teacher enters a school, end-of-school-year test scores in
the grade he or she teaches rise
immediately...

... and students
assigned to such high value-added teachers are more likely to
go to college, earn higher incomes, and less likely to be
teenage mothers. On average, having such a teacher for one
year raises a child's cumulative lifetime income by $80,000
(equivalent to $14,500 in present value at age 12 with a 5%
interest rate).

The earnings gains from
replacing a low value-added (bottom 5%) teacher with one of
average quality grow as more data are used to estimate
value-added. Discounting future earnings gains to present
value, the gains are $270,000 with 3 years of data. If future
earnings are not discounted, cumulative earnings gains surpass
$1.4 million per class.

We conclude that great teachers create great value,
and that test-score based value-added measures are one
useful input into identifying such teachers.

Note: The results of this study were originally
disseminated as NBER Working Paper 17699 in December 2011. The
final results of this study are published in the American
Economic Review as two separate papers. The first paper
evaluates bias in VA estimates, while the second estimates
teachers' long-term impacts. The two final papers as well as
the original paper are posted on this site; the STATA code
corresponds to the revised manuscripts.